Bankers head for a pinfall

The World Wrestling Federation is preparing to take on Wall Street.

Roll up, roll up for the greatest show on earth. The venue for the clash of two cultural titans is New York. In the redneck corner is Vince McMahon, the billionaire who built his fortune turning the World Wrestling Federation into one of America's most popular diversions. His opponents in the blue-blooded corner are the Wall Street financiers who scorn the vulgarity of Mr McMahon's over-hyped set-pieces. But Mr McMahon threw down the gauntlet last week by announcing his plan to float part of his $750m (pounds 470m) business. His challenge now is to convince these institutional investors to participate in one of the most unusual initial public offerings America has ever seen.

Mr McMahon's cornermen - the bankers from Bear Stearns and Credit Suisse First Boston who have been enlisted to manage the issue - have been forced to take a crash course in the WWF's complicated plot lines. They are now on first name terms with Stone Cold Steve Austin, the WWF's reigning champion, as well as the evil Undertaker and the curiously dubbed Mr Ass.

The names may be absurd, the action choreographed and the audience very much non-U, but the WWF has been a resounding financial success, thanks largely to Mr McMahon's business acumen. Since buying his father's wrestling company in 1982, Mr McMahon has built a global business broadcasting bouts in more than 150 countries to an audience estimated to exceed 500 million people. Annual turnover reached $251m last year, and profits jumped to $56m.

The WWF, which is based in Stamford, Connecticut, generates much of its revenue through the turnstiles at the 200 live shows it puts on every year. But income from selling the television rights is the greatest contributor. Wrestling junkies across America can gorge themselves on at least two live shows each week, plus a series of magazine and highlights programmes.

Bill Carroll, director of programming for media buyer Katz Television Group, believes that the WWF shows have a unique appeal to advertisers.

"The most difficult demographic for advertisers to reach is young men who don't tend to watch entertainment programmes," he said. "Wrestling achieves a pretty significant share of their audience and this is good for promoting products such as movies, soft drinks and fast food."

Wrestling's other staple audience is children whose fanaticism supports the WWF's huge merchandising revenue, which last year topped $81m. The WWF's official website even includes a list of its top-selling branded products, headed by a replica of Steve Austin's championship belt. In its eagerness to protect this valuable revenue, the latest edition of the official magazine, Raw, contains an article explaining how to spot bootlegged merchandise.

Mr McMahon's success in attracting a young audience contrasts with ITV's decision to drop British wrestling from its schedules in the 1980s because its only appeal seemed to be to the elderly. Bankers familiar with the business are confident that investors will lap up the offering regardless of their opinion of wrestling.

"Investors have one goal: to make money," said one American banker. "This is a fast-growing media and enter- tainment company and we expect both retail and institutional interest."

He dismisses any concern that Mr McMahon is only selling a fraction of the WWF's voting shares, enabling him to retain power after the IPO. Mr McMahon owns the WWF in its entirety. His chief executive officer is his wife Linda; and his son Shane is also involved.

"He is a charismatic leader, a talented performer and a visionary. I think investors will be glad that he's still there," he said.

There is no question of Mr McMahon cutting and running. He will still have almost $600m tied up in the WWF and has pledged to use the $175m he hopes to raise to boost the business. In any case, wrestling is in his blood - he is the fourth generation of his family to have made a living promoting bouts.

Mr McMahon's commercial skills have enabled him to survive the challenge of Ted Turner, the media mogul whose rival World Championship Wrestling has failed to overtake the WWF.

In fact, the major concern for investors may be the sporadic legal problems which have beset the WWF. Three months ago in Kansas, an attempt to lower Canadian Owen Hart into the ring ended in tragedy when he plunged 50 feet to his death. The accident provoked criticism of the WWF's increasingly spectacular stunts and has raised the prospect of legal action by relatives and traumatised viewers.

Meanwhile Sable, a female wrestler, recently launched a claim against the WWF for alleged sexual harassment. The action has now been settled - Sable has since posed nude for Playboy magazine - but nothing worries investors more than a legal dispute.

The other threat to the WWF's float is its ability to hang on to the star wrestlers. It is already engaged in a bidding war with the rival WCW to secure those fighters with the most box-office appeal. Now that the WWF has finally been forced to reveal details of its remarkable profitability, some of its 110 wrestlers may demand a greater share of the spoils.

Mr McMahon has proved adept at exploiting his talent. The WWF owns the rights to the characters its wrestlers play, so their currency is devalued if they defect to the WCW. And, almost uniquely in American sport, wrestlers do not have a union to protect their rights.

If the flotation ends up on the ropes, Mr McMahon can rely on a formidable tag-team partner. Jesse "the Body" Ventura, one of his former wrestlers and now governor of Minnesota, recently helped seize control of America's third largest political grouping, the Reform Party, founded by Texan billionaire Ross Perot. With Ventura considering a shot at the White House and Mr McMahon poised to conquer Wall Street, America's political and financial establishment must feel that the barbarians really are about to tear down its gates.